Married? Could You Be Missing Out On A £1,256 Tax Break?

In the hustle and bustle of daily life, many of us might not be aware of the potential financial benefits waiting just a click away. A tax break, known as the Marriage Allowance, could be waiting for millions of UK couples. Lovemoney.com estimates that 2 million couples are not claiming it. Are you one of them?

What’s The Marriage Allowance?

Introduced by the Government in April 2015, the Marriage Allowance is a tax relief designed specifically for married couples or those in a civil partnership. It lets one partner share part of their tax-free Personal Allowance with the other, which can reduce the couple’s overall tax bill. Imagine if one of you doesn’t earn enough to pay tax, you can transfer a chunk of your unused tax-free allowance to your partner to cut down on their tax bill.

Just How Many Are Benefitting?

According to the taxmen at HMRC, while 2.2 million eligible couples are already enjoying this perk, there’s another two million who haven’t yet taken advantage of it. That’s a staggering number of people who could be pocketing a saving!

What’s In It For You?

For the current tax year (2023/24), you can transfer up to 10% of your unused tax allowance to your spouse or civil partner. To put that in pound signs, if you were to transfer the entire 10%, that’s a whopping £1,260! This would translate to an overall saving of £252 for the year, split evenly between you two.

And here’s the cherry on top: you can also apply for this allowance to be backdated for up to four years. So, if you’ve missed out previously, you could be looking at a tidy sum of about £1,256 in total.

Who Can Claim It?

Now, before you rush off to claim, here’s a quick checklist to see if you’re eligible:

  • Both of you need to be in a marriage or civil partnership.
  • Cohabiting couples, even with children, unfortunately don’t qualify.
  • Both partners should be born on or after 6 April 1935. If you were born before this, look into the Married Couple’s Allowance.
  • One partner should be a non-taxpayer, earning under the Personal Allowance threshold of £12,570 for 2023/24.
  • The other partner needs to be a Basic Rate taxpayer, earning under £50,270 for this tax year.

Remember, if you’re thinking of claiming for past years, the tax thresholds and allowances were different, so it’s worth double-checking those figures.

Lost A Loved One? There’s News For You

If you’ve lost your spouse but were eligible for the allowance after its 2015 introduction, there’s good news. The Budget has made provisions for you to make a retrospective claim. In earlier times, bereaved partners couldn’t claim any backdated amount, but this has changed.

Ready to Claim? Here’s How

Applying is straightforward. All you need is:

  1. A visit to the HMRC website.
  2. Both of your National Insurance numbers.
  3. ID for the non-taxpayer.

The non-taxpayer should be the one to fill in the application. Once you’ve applied, HMRC will give you the green or red light on your eligibility and also inform you about any backdated allowances.

Typically, the Marriage Allowance is factored into the recipient’s tax code, adjusting it for the year. The partner who transfers some of their allowance will also see a revised tax code.

And remember, this isn’t a one-time thing. The Marriage Allowance will continue until you decide to cancel it or if your circumstances change, in which case, just let HMRC know.